It was only a few weeks ago that home sellers had to brace themselves for a flood of offers when they listed their home.
Few were selling for asking price, with most attracting multiple higher offers. One 550-square foot cabin on a tiny parcel in Colorado was listed for more than well over $400,000.
In fact, at the time, Forbes said the real estate market was “not a bubble.”
The report said today’s housing market “could chug along for many more years.”
The report explained, “Back in the mid-2000s, after a systematic dismantling of financial regulations, the real estate market rallied for all the wrong reasons: ‘no-doc’ mortgages (those approved without verifying the borrower’s financial condition), an appraisal industry gone awry and paid-for AAA credit ratings for derivative products backed by junk-quality mortgage loans. The real estate boom was built on a flimsy foundation and, accordingly, it came crashing down. The ensuing crisis was severe.”
But it explained, “Very little of that is happening today. Banks have adopted (or forced to adopt) much more stringent lending standards, leading to the lowest ratio of real estate loans to total loans for commercial banks since the 1980s.”
The report suggested real estate’s surge was because of an imbalance in supply and demand “that was years in the making.”
But, according to a report from CNBC, the market right now is slumping because of high interest rates, fueled by Joe Biden’s economic policies, that prevent potential buyers from borrowing all they want.
In fact, inflation, also under Biden’s economic practices, and interest rates are “hammering” American consumers, and affecting the housing market.
The report explained the demand for mortgages fell last week to the lowest point since 2000.
The problem isn’t complicated. Because of the interest rates being triggered by inflation – which recently was pegged at 9.1% – consumers no longer can buy as much house as they want, while those prices remain high.
In the report, Joel Kan of MBA said, “Purchase activity declined for both conventional and government loans as the weakening economic outlook, high inflation and persistent affordability challenges are impacting buyer demand.”
The report explained, “The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 5.82% from 5.74%, with points increasing to 0.65 from 0.59 (including the origination fee) for loans with a 20% down payment. That rate was 3.11% the same week one year ago.”
The refinance industry also is slacking off, the report said.
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